McDonald’s BIG problem

Why We’re Loving It: The Psychology Behind the McDonald’s Restaurant of the Future

McDonald’s BIG problem

“The reality is our recent business performance has been poor. The numbers don’t lie” — Steve Easterbrook, CEO McDonald’s, 2015.

Back in 2015, McDonald’s was struggling. In Europe, sales were down 1.4% across the previous 6 years; 3.3% down in the US and almost 10% down across Africa and the Middle East. There were a myriad of challenges to overcome. Rising expectations of customer experience, new standards of convenience, weak in-store technology, a sprawling menu, a PR-bruised brand and questionable ingredients to name but a few.

Breaking through the limits of value-engineering

McDonald’s are the original fast-food innovators; creating a level of standardisation that is quite frankly, remarkable. Buy a Big Mac in Beijing and it’ll taste the same as in Stratford-Upon Avon.

So when you’ve optimised product delivery, supply chain and flavour experience to such an incredible degree — how do you increase bottom line growth? It’s not going to come from making the Big Mac cheaper to produce — you’ve already turned those stones over (multiple times).

The answer of course, is to drive purchase frequency and increase margins through new products.

McDonald’s Achilles heal: Status quo bias

Numerous studies have shown that no matter what options are available, people tend to stick with the default options and choices they’ve made habitually. This is even more true when someone faces a broad selection of choices. We try to mitigate the risk of buyers remorse by sticking with the choices we know are ‘safe’.

McDonald’s has a uniquely pervasive presence in modern life with many of us having developed a pattern of ordering behaviour over the course of our lives (from Happy Meals to hangover cures). This creates a unique, and less cited, challenge for McDonald’s’ reinvention: how do you break people out of the default buying behaviours they’ve developed over decades?

When a Big Mac Meal with a chocolate milkshake is what I order, and have done for 20 years, how do you drive another £1 spend with me?

Welcome to ‘The Restaurant of the Future’

Their response to this, along with the other challenges outlined, has been McDonald’s restaurant of the future concept. McDonald’s are now back in growth and this format is widely hailed by Wall Street as central to that turnaround. Home delivery, table service, self-service ordering, in-store technology upgrades and of course new products and menu techniques.

The following article breaks down its features and tries to show some of the psychological mechanisms that underpin its success.

What outcomes does the new format need to deliver?

In its simplest sense, the new format is designed to improve customer experience, which will in turn drive frequency and a shift in buying behaviour (for some) towards higher margin items. The most important shift in buying patterns is to drive reappraisal of the Signature range to make sure they maximise potential spend from those customers who can afford, and want, a more premium experience.

1. Arrival & entry

Decision-anchoring

On arrival to any McDonald’s now you’ll see their signature range promoted. No pricing information, just succulent imagery. This leverages a research insight that the first options we meet when making a decision, tend to be the ones we end up choosing.

Studies have shown in the US that when people pick up food from a buffet station, 70% of the time they fill their plates with the first 3 items they come to. Why? All subsequent choices are compared to the initial reference point.

So for McDonald’s to drive changes in buying habits, they need to take control of the first choice that makes it onto the consideration list.

Looks great, but where’s the price?

Reducing psychological pain

Spending money feels psychologically painful. We tend to weigh the tangible relative loss of something (in this case money) more than we value the intangible equivalent gain (the food experience).

When you walk into a McDonald’s, check out the promotions inside and out. No pricing information. Just beautiful imagery that gives us the psychologically smooth, care-free experience of choosing without considering the ‘loss’ impact of our choices. Feels good right? Just choose the picture you like.